Requirements, Responsibilities and Risks of a Singapore Company Director
This article outlines the key information of being a Singapore Company Director and the Responsibilities and Risks of being appointed as one. Requirements of a Director A director is the person in charge of managing the affairs of the company. He/She must make decisions objectively and in the best interests of the company. Every company must have at least 1 director who is locally resident in Singapore. Here are the basic requirements for a company director. He/She must be:
At least 18 years old;
Of full legal capacity;
A Singapore Citizen, Singapore Permanent Resident or EntrePass holder.
A director may also be an Employment Pass (EP) holder. However, an EP holder wishing to become the director of a local company must first get a Letter of Consent (LOC) from the Ministry of Manpower
Cannot be disqualified from acting as a director of a company e.g. an undischarged bankrupt.
Responsibilities and risks of a Director Statutory Duties The various statutory duties imposed on directors pursuant to the Companies’ Act are:
Duty to act honestly and with reasonable diligence (s 157(1));
Duty not to make improper use of his/her position as an officer or agent of the company or any information obtained by virtue of his/her office to gain advantage for himself/herself (either directly or indirectly) or to cause detriment to the company (s 157(2)) ;
Duty to disclose potential conflicts of interest in transactions or due to holding of office or ownership of property (s 156(1), (5));
Duty not to make unauthorised grants of financial assistance to directors (s 162(1));
Duty not to make unauthorised grants of financial assistance to director-related companies (s 163(1));
Duty to arrange for and hold annual general meeting (s 175(1));
Duty to keep minutes (s 188);
Duty to keep accounting records and books (s 199(1));
Duty to file annual returns (s 197(1));
Duty not to engage in wrongful or reckless trading (s 339(3));
Duty not to engage in fraudulent trading (s 340(1)).
In addition to his/her duties under the Companies Act, the director also has duties under the following:
Prevention of Corruption Act;
SGX-ST Listing Manual;
Any other relevant legislation.
Fiduciary Duties Every director must fulfil the following fiduciary duties:
To safeguard and act bona fide in the interests of the company;
To act honestly and for the proper purposes of the company in relation to its affairs
Not to pursue his/her own interests and/or act to the detriment of the company;
Not to place himself/herself in a position where personal interests would conflict with the company's interests;
Not to exercise his/her powers for personal benefit or gain without clearly disclosing his/her interests to and obtaining the necessary consent from the company's board of directors;
Not to enter into engagements in which he/she has a personal interest conflicting or which may conflict with the interests of the company;
Not to divert any business opportunity in which the company is interested away from the company to himself/herself.
We wish to highlight that the penalties prescribed under the Companies Act for default in compliance with the provisions therein are significant. Section 204(1A) of the Act provides that any director who fails to comply or to secure compliance by the Company of the aforesaid provisions shall be guilty of an offence under the Act and shall be liable on conviction to a fine not exceeding S$50,000/-. Any breach in fiduciary duties may result in civil liabilities and remedies.
Should you need an expert advice in regard to this matter, contact us now for a non-obligatory consultation.
Atriox Management Pte. Ltd.
7, Temasek Boulevard, #12-07 Suntec Tower One, Singapore 038987
Mobile/Whatsapp: +65 89443991 / 88575256
Your One-Stop Holistic Business Services Provider